Telephone, insurance, banking and advertising are set to cost more with the increased service tax of 12 per cent becoming effective from April 18. The increase from the rate of 10 per cent earlier follows the President's assent to the Finance Act, 2006.

In addition, education cess can be levied at the rate of 2 per cent of 12 per cent, taking the total tax burden on services to 12.24 per cent. The increased rate would apply to 81 services.

A release said the government had also made effective from April 18 the amendment under which service tax would be paid by the recipient of a service which is provided in India from abroad.

Other amendments proposed in the Finance Bill in relation to services have also become effective from April 18. These include rules regarding valuation of services for charging service tax, provision for payment of the tax after issue of a show-cause notice and provision for attachment of property to protect revenue in certain cases.

Then, there is a penalty for failure to pay service tax, recovery of any amount due to the Central government, interest of 13 per cent per annum on amount collected in excess, publishing of information in respect of persons in certain cases and the power to grant rebate and make rules.

Officials said under the valuation of service rules, an important change had been made from the draft circulated for comments pertaining to services where the charge partly consists of money.

"In such cases it has been now clarified that if the value of a similar service is not available, then the service provider can, on his own, determine the total money value of the service and pay the service tax accordingly," an official said.

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